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In the past, businesses relied on referrals more than they relied on advertising. A certain local establishment can be a town landmark yet does not employ any kind of marketing campaign because it has excellent word-of-mouth. Presently, there are so many marketing strategies aside from referrals which any small business can employ. However, the power of referrals is still going strong, making it a must for local businesses.

Unless your customer is that happy with your services, you cannot expect them to refer you to their friends and family without you motivating them first. This is why most local businesses have a referral program wherein they reward customers for their referrals. The idea of giving out incentives will usually mean that a business has to spend money in order to make money. But if this strategy is carried out wisely, business owners need not worry about throwing cash into the drain.

1. Discounts

This is probably the most convenient incentive which a business owner can use to get a customer to promote his business to family and friends. By successfully referring you to someone they know, they can avail of discounts the next time they purchase an item or subscribe to a service. Another version of this is to give out points instead of discounts. You can give each customer a card and grant them points which correspond to the number of people which they have referred. Once they have reached a certain number of points, they can use their points to redeem an item.

2. Freebies

If you want something more enticing, then you can give out freebies instead. For every friend that a customer has successfully referred, that customer is entitled to receive a certain product or avail of a particular service. This can be more motivating because then customers will have the satisfaction of receiving something tangible for free rather than something abstract like points or discounts.

3. Share-a-Gift

This is a more creative reward which will work best with beauty salons and other service-based businesses. Essentially, you’re handing out a free gift to a loyal customer which he or she can “share” with a friend. This strategy is two pronged—first it awards a loyal customer by giving him, or her, a freebie, and second, it tries to make convert a “friend” into a customer by letting him or her sample a certain service offered by the store.

Chris Marentis is an experienced marketer with over 25 starting and growing successful businesses. He is currently CEO at SureFire Social, involved in local internet marketing and local search engine marketing.